Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251292 
Year of Publication: 
2021
Series/Report no.: 
Working Papers No. 2021-21
Publisher: 
Banco de México, Ciudad de México
Abstract: 
We document the evolution of labor markets of five Latin American countries during the COVID-19 pandemic, with emphasis on informal employment. We show, for most countries, a slump in aggregate employment, mirrored by a fall in labor participation, and a decline in the informality rate. The latter is unprecedented since informality used to cushion the decline in overall employment in previous recessions. Using a business cycle model with a rich labor market structure, we recover the shocks that rationalize the pandemic recession, showing that labor supply shocks and productivity shocks to the informal sector are essential to account for the employment and output loss and for the decline in the informality rate.
Subjects: 
COVID-19
labor markets
informality
structural model
Brazil
Chile
Colombia
Mexico
Peru
JEL: 
E24
E32
F44
J65
Document Type: 
Working Paper
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